PIA to Participate in NCOIL Summer Meeting

PIA National will participate in the summer meeting of the National Conference of Insurance Legislators (NCOIL) July 10-13 in New York City. A scheduled...

July 8, 2008

PIA National will participate in the summer meeting of the National Conference of Insurance Legislators (NCOIL) July 10-13 in New York City. A scheduled NCOIL-NAIC dialogue is slated for July 11. It will update the progress of the Interstate Insurance Product Regulation Commission, efforts in producer licensing and the NAIC's market conduct studies.

The topic of the Insurance Information Act of 2008 (H.R. 5840) is sure to come up. NCOIL has called the measure "dangerous," a path to a federal regulator (see item #3 above). The NAIC offered "conditional support" for the bill - but that was before the abrupt resignation of Cathy Weatherford as staff head of the NAIC (see item #1 above).

Among the other issues set for discussion at the NCOIL meeting:

Use of Legal Settlements as Public Policy Instruments: On July 11, the State-Federal Relations Committee will consider a resolution concerning the use of legal settlements as public policymaking instruments in insurance, sponsored by Rep. Greg Wren (AL) and Rep. Rich Golick (GA).

The resolution, among other things, expresses concern regarding the public policy implications of recent legal settlements with insurers and mega-brokers, and reaffirms the authority of state legislators to set insurance public policy. At issue are the kinds of settlements that ban contingent commissions, bans which have been thrown out by several courts (see item #5 above). The Committee will also consider a friendly amendment sponsored by Rep. Craig Eiland (TX) in the form of a substitute resolution.

State Authority Study Recommendations: On July 10, during a meeting of the Insurance Legislators Foundation (ILF) Board, a select Subcommittee, comprised of NCOIL officers and past presidents, will discuss efforts to implement recommendations contained in an ILF Study on State Authority. The ILF commissioned the study in 2007 to take an in-depth objective look at insurance regulation in the states in order to make necessary improvements. The PIA Insurance Foundation provided a $50,000 grant to furnish a portion of the start-up funding for the study.

The Subcommittee also will discuss a second report that will examine state statutes to determine delegation of insurance authority. The ILF - the research and educational arm of NCOIL - will also consider a related resolution regarding NCOIL resources to enhance state insurance regulation.

Market Conduct Annual Statement Filings: On July 11, the State-Federal Relations Committee will consider a resolution opposing an NAIC plan to utilize the annual statement for the collection and dissemination of market conduct data.

The resolution overviews an NAIC proposal to require filing of market conduct data in conjunction with insurer annual financial statements and says that no state legislature has required such a fundamental change. The resolution expresses NCOIL concerns regarding NAIC authority to collect such market conduct data; costs of compliance; and confidentiality. NCOIL, the resolution says, believes the NAIC should extend its consideration of the market conduct proposal to allow for further legislative and other input, and commits NCOIL to working with the NAIC and individual state regulators regarding an appropriate collection of market conduct information.

The resolution, as initially drafted, would support a system in which optional state/regional catastrophe funds could serve as pass-through mechanisms for distribution of interest-free federal loans - payable over the course of 20 years - following qualified natural disasters. Amendments first offered at the 2008 Spring Meeting would set more general requirements for federal aid but would add that funding options should include a federal reinsurance backstop.